The Corporate Transparency Act (CTA), enacted as part of the National Defense Authorization Act for FY 2021, created one of the most significant new compliance obligations for small businesses in a generation. The beneficial ownership information (BOI) reporting requirement under 31 U.S.C. § 5336 took effect January 1, 2024. Despite extensive litigation challenging its constitutionality, the requirement has been upheld and enforcement is active.
What Is BOI Reporting?
BOI reporting requires most U.S. business entities to file a report with the Financial Crimes Enforcement Network (FinCEN) identifying the entity's beneficial owners — the individuals who ultimately own or control the company. The purpose is to combat money laundering, tax fraud, and other illicit financial activities that have historically used shell companies to obscure ownership.
Who Must File
A "reporting company" under 31 C.F.R. § 1010.380 is any corporation, LLC, or other entity created by filing a document with a Secretary of State or similar official under U.S. state or tribal law, OR any foreign entity registered to do business in the U.S. by such a filing. This covers the vast majority of U.S. LLCs and corporations.
There are 23 categories of exemptions, including: entities with 20+ full-time U.S. employees, $5M+ in gross receipts, and a physical U.S. office; SEC-reporting issuers; banks and registered investment advisors; and inactive entities. Most startups, SMBs, and real estate LLCs do NOT qualify and must file.
What Is a Beneficial Owner?
A beneficial owner is any individual who directly or indirectly: (a) exercises substantial control over the entity, OR (b) owns or controls at least 25% of the ownership interests. Substantial control includes senior officers (CEO, CFO, COO, General Counsel), board members with significant authority, and any individual with authority to appoint or remove senior officers.
Each beneficial owner must provide: full legal name, date of birth, current residential address, and a unique identifying number from an acceptable document (U.S. passport, driver's license, or foreign passport).
Filing Deadlines
- Entities formed before January 1, 2024: Initial report was due by January 1, 2025. If not filed, file immediately.
- Entities formed in 2024: 90 days from the date of formation.
- Entities formed on or after January 1, 2025: 30 days from the date of formation.
- Updates: Any change to beneficial ownership information must be reported within 30 days of the change.
Penalties
Civil penalties for willful failure to report are $591 per day (inflation-adjusted) while the violation continues, up to a maximum of $10,000. Criminal penalties include fines up to $10,000 and imprisonment up to 2 years under 31 U.S.C. § 5336(h).
The FinCEN ID Option
Individuals who are beneficial owners of multiple entities can obtain a FinCEN Identifier — a unique number that can be used in place of providing personal information on each entity's report. This simplifies reporting for serial entrepreneurs and investors appearing on many BOI reports.
How Compliance Singularity Handles BOI
Compliance Singularity detects every entity in your corporate structure subject to BOI reporting, collects beneficial owner information through a guided intake flow, and files the initial BOI report with FinCEN. When ownership changes — a new investor comes in, a founder departs, an officer changes roles — the system detects the change and queues the required update filing within 30 days. FinCEN ID numbers are stored and reused across multiple entity filings.